Fed Ex

eCommerceMerging eCommerceand the Supply Chain

©2000 FedEx Corporation - Briefing at AnnualNDIA Conference

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MergingeCommerce and

the Supply Chain

Presented by

Brett BuckholdIntegrated Technology Consultant

FedEx e Supply Chain Services

May 10, 2000



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FedEx Corporation OverviewA Networked Economy

Key Business Trends

FedEx’s eSupply ChainPerspective

Response to theMarketplace

Case Study Examples

Questions

Agenda



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FedEx CorporationOverview1



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FedEx CorporationOverview

A Networked Economy (KeyBusiness Trends)


A Response to theMarketplace

Case Study Examples

Summary

Who is FedExCorporation?

Headquarters:Memphis, Tennessee

Time-definite expressdeliveryHeadquarters:Memphis, Tennessee

Small-package grounddeliveryHeadquarters:Pittsburgh, Pennsylvania

Exclusive-use, expedited,door-to-door deliveryHeadquarters:Akron, Ohio

Consolidated sales, marketing andinformation technology supporting asingle, global FedEx brandHeadquarters:Memphis, Tennessee

Tower Group InternationalCustom brokerage/consulting

Integrated logistics, technologyand transportation solutionsHeadquarters:Memphis, Tennessee

Foremost less-than-truckloadfreight carrier in the western US



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Case Study Examples

Summary

FedEx CorporationProvides...

FedEx CorporationFedEx CorporationWorldwide ServicesWorldwide Services

Network Network ManagementManagement

Physical Based Physical Based ServicesServices

Information BasedInformation BasedSupply Chain SolutionsSupply Chain Solutions

� Transportation to and from 90% of the world’s GDP� Complete management of related information and logistics services



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A NetworkedEconomy - KeyBusiness Trends

2



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Case Study Examples

Summary

Key Business Trends

• Providing fast, global reach

• Speeding the supply chain

• Conducting business electronically

Three major trends shaping a“networked economy”



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Case Study Examples

Summary

Key Business Trends

Fast, Global Reach

• World’s economy has become more fullyintegrated (a ‘business without borders’environment)

• Ability to source and sell globally is acritical success factor

• Framework for global commerce isessential



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Case Study Examples

Summary

Key Business Trends

• Fast-cycle logistics is increasing ascompanies of all sizes discover the powerof supply chain velocity

• Information-intensive services will powerthe supply chain

• Ability to manage inventory at rest whilemanaging inventory in motion is anintricate step of the supply chain

• Adding value, visibility and velocitythroughout the supply chain will beexpected

Speeding the Supply Chain



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Case Study Examples

Summary

Key Business Trends

• Electronic commerce in general is the bestway to minimize time and distance

• Convenience, accessibility, connectivity,and reliability are the prerequisites ofconducting business electronically

• Business-to-business e-commerce is thelargest growing segment of this trend(estimated to top $100 billion in sales thisyear and exceed the trillion-dollar salesmark by 2003) - Forrester Research 1999

Conducting Business Electronically



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FedEx’s eSupplyChain Perspective3



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Case Study Examples

Summary

eSupply Chain ManagementWhat is it?

Retailers ConsumersSuppliers Manufacturers Distributors

The coordination and movement of products,information and currency from the suppliers’

suppliers through manufacturing to thecustomers’ customers

• A cross-functional business process• Increasingly driven from the right to the left,

from the consumer and customer to thesupplier and manufacturer

• Competitive focus is no longer a product vs.product, but rather supply chain vs. supplychain



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Case Study Examples

Summary

eSupply Chain ManagementWhat is the value?

• Richmark study respondents expect supplychain solutions:• To drive savings of 3-6% of revenue• Are willing to invest 18-25% of these savings

over 3-5 years• Are willing to invest $10M annually for

operations

• Additionally, a PRTM study finds for mid-market companies (typical - $500M revenue):• $5-15M in annual supply-chain cost reduction

benefits• 10-15% improvement in on-time commitment

performance• 12-40% increased volume flexibility



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Response to theMarketplace4



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Case Study Examples

Summary

FedEx eSupply Chain Approach

PlanDemand

Co-PlanningManufacturing

DistributionNetwork

PlanDemand

Co-PlanningManufacturing

DistributionNetwork

Monitor andManage

Service RecoveryProactive Reporting

Monitor andManage

Service RecoveryProactive Reporting

Orchestrate &Optimize

Right ProductRight TimeRight PlaceRight Price

Orchestrate &Optimize

Right ProductRight TimeRight PlaceRight Price

TransportationServices



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Case Study Examples

Summary

• Two approaches• Integration of planning software tools with

visibility• Collaborative planning applications and

services for mid-market companies

• Need addressed• To balance supply and demand

• Value• Planning collaboration results in more

demand-responsive, accurate forecasts andproduction schedules (this improves order fillrate, delivery performance, and reducesinventory)

FedEx eSupply Chain ApproachPlan



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Case Study Examples

Summary

FedEx eSupply Chain ApproachOrchestrate and Optimize

• The ability to time-phase the express and non-expressdistribution of products and orders on a global basis.“The right product at the right place at the right time.”

• Need addressed• To optimize supply chain performance

• Value• One source coordination that optimizes pick location,

mode selection, carrier selection and management,international trade, and warehouse activities

• DCSS components• Order Management System• Warehouse Management System• Multi-Carrier Shipment Automation• Trade Compliance Expertise• Transportation Management

and Optimization• Merge-in-Transit Capabilities• Multiple Processing Facilities• Billing & Invoicing• Web Enablement

A customer is able toprovide on-time

delivery commitmentto their customer at

time of order andcoordinate the

shipment with othercomponents to arrive

at the same time.



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Case Study Examples

Summary

FedEx eSupply Chain ApproachMonitor and Manage

• Ability to view in-transit and static inventory and orderstatus, coupled with real-time exception alerts.Provides monitoring services with proactive recoveryand ongoing metrics for continuous improvement.

• Need addressed• To know what is happening across the supply chain; to

access and share data across the supply chain

• Value• Less reliance on inventory, improved customer service

and retention

• DCSS Components• GIV• SC3• FedExNet2

• Customer service

A customer is informed by their FedExCommand & Control Monitor that her

order is in jeopardy due to a freightforwarder error. Shipment is diverted toanother transportation mode or carrier.

Shipment is on time. Plan integrity ismaintained.



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Case StudyExamples5



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How is the customer using eCommerce?How is the customer using eCommerce?EDI - INTEDI - INT

KPMG - FedExAlliance Recap


Worldwide ServicesMarket Approach

Partnering forSuccess

Next Steps

Q&A

So

luti

on

/Ch

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e

Fed

Ex

Co

rpo

rati

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Cu

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mer

Ben

efit

s• Enable customers to trace orders from

inception to delivery via customer webpage

• Populate customer order system andweb page with secure shipment datalinked to customer order number

VikingFedEx

GroundFedEx

Express

VikingFedEx

Net

Web Page

CustomerService

After

• Eliminates approximately 40% of thetracing calls received by customereach day (13,000 total - all carriers)

• Reduces FedEx customerservice calls

• Improved asset utilization(FedExNet)

• Breathes life into FedEx synergistic value proposition

ECXpert EncryptionECXpert

Encryption

FedExGround

FedExExpress

Before



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• Reduce global inventory• Reduce circuitous shipments and

transit miles

• Global merge

So

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/Ch

alle

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e

Before

After

Total days in transit and awaiting installation = 5

Total days in transit and awaitinginstallation = 24

Ben

efits

3

Customer

Component 1DC

1

2

Customer

Component 1

5

1

• Growth without additionalinfrastructure

• Inventories cut• Cash flow accelerated

• Unique (turnkey) replicablesolution

• Consultation fees• Incremental transportation volume

Fed

Ex

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3

2

5

4

4

25

How is the customer using eCommerce?Orchestrated Delivery Management



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Case Study Examples

Summary

Enabling Technologies

Operating Entities

Ph

ysic

alIn

form

atio

n

Transportation Integrated Solutions

SAPSAP

FDX Logistics

FedExCorporationWorldwideServices

Network Logistics

eSCS

FedEx Solution Engine



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ThankYou

Questions6

Fed Ex

Documents

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